We're Hard Money Loan specialists
We arrange fast Hard Money loans from $50k to $50m, financing real estate investors, developers, business owners and entrepreneurs in Florida and Texas.
Our Hard Money loan service
- We close fast (in some cases in as little as 3 days!)
- Property eligible even if its not generating any income (ie its not leased)
For properties that need renovation - Accessible to people with credit below 620
- Verifiable income & tax returns NOT required
- Available to foreign national borrowers
- Market-leading property hard money loans from $50,000 to $50m
- Monthly interest rates from 9.49%
(Lower rates for $1m+ loans or less than 50% LTV) - LTVs up to 80% (up to 100% finance if additional collateral is available)
- 1st lien positions
- Terms up to 36 months
Hard Money property eligibility
Single Family Properties
Single Family is classified as one to four-unit residential use dwellings including condominium, planned unit developments (PUDs), town homes, duplex’s, triplex’s, and quadplex’s.
Multi Family Properties
Multi-family is classified as multiple units, that's 5 or more, residential use dwellings are contained within one or more buildings within one community or complex.
Mixed Use
Mixed-use is a type of development that compromises of both residential and commercial elements in one property.
Retail
Retail is any property used for commercial retail space such as a storefront for selling goods or services.
Office
Office is classified as a building that generates income from tenants comprised of businesses and professionals.
Hospitality
Hospitality is classified a property used as a hotel, motel, holiday inn and lodging sector.
Commercial
Commercial has a wide range of property types, but the majority are: Self storage, marinas, gas stations, parking facilities and automotive units, as examples.
Care
Care is classified as medical centres and senior housing.
Hard Money program criteria
| Loan to value (LTV) | Under 660 Credit Up to 65% LTV Over 660 Credit Up to 80% LTV |
| Loan term | 6 - 36 months (other terms by exception) |
| Loan amount | $50,000 up to $50m |
| Interest types | Serviced, Retained and Rolled-up |
| Interest rates | From 9.49% |
| Points | 1.75 - 3% |
| Lien | 1st position |
| Decision | Immediate decision in principle (DiP/AiP) |
| Closing | 3 - 7 days for loans up to $5m 10 - 28 days for loans up to $50m |
| Prepayment Penalty | None |
| Appraisal Required | None |
| Availability | USA (Florida & Texas) UK (England, Scotland, Wales and Northern Ireland) Europe Individuals, Companies, SPVs |
| Exit strategy | Sale or refinance |
Find the best rates on your Hard Money loan
We offer experience-based, impartial information and accessing quotes from the whole of market. Because we have incredible relationships with many specialist USA's lenders we're also able to move fast and can give decisions the very same day.
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A comprehensive guide to Hard Money Loans
If you're unsure what a Hard Money loan is, how it can be used or how it works, we've created an easy to understand guide to Hard Money loans.
Contents
An introduction to Hard Money Loans
If you're involved in the real estate market, chances are you've heard about hard money loans. But what exactly are they? Let's clear that up.
What Makes Hard Money Loans Unique?
A hard money loan, as provided by private lenders, is a type of asset-backed financing option where the borrower receives funds secured by tangible property. It’s quite different from traditional mortgage or construction loans because it doesn't revolve around your credit score but rather the value of your collateral—typically an investment property.
This gives them flexibility that other lending options just can’t match. If we look at conventional mortgages for example, banks tend to have stringent requirements and slower approval times due to their regulatory obligations. With hard money loans though, those restrictions aren't present which makes funding faster and more efficient.
The Difference Between Hard Money and Traditional Loans
Comparing hard money with traditional lending methods helps highlight some key differences between them:
- Credit History: In typical banking scenarios like applying for a conventional mortgage or even construction loans, borrowers need strong credit history—a prerequisite not emphasized when securing a hard money loan.
- Funding Speed: While traditional financial institutions may take weeks to approve funding requests due to thorough checks on factors such as tax returns or employment verification; this isn’t necessary with private lenders who primarily assess the collateral’s worth before disbursing funds quickly.
This ability to bypass certain constraints makes these types of finance ideal for real estate investments requiring immediate action - be it fixing & flipping properties or capitalizing on a hot market trend.
If you're in the realty biz and need swift financing for an investment property without dealing with all the paperwork that accompanies traditional loans, hard money lending might be your best bet. But remember—every coin has two sides. In our next section, we'll explore how to secure these loans along with their potential risks and rewards.
Key Takeaway
Hard money loans, provided by private lenders and backed by your property as collateral, offer quick funding options for real estate investments. They don't hinge on credit history like traditional loans do but focus more on the value of your asset. Ideal for fast-paced markets or fix & flip projects, they skip the red tape of conventional financing methods.
How Hard Money Loans Work
Securing a hard money loan is different from applying for traditional mortgages. Instead of focusing on your credit score or income, lenders base their decision primarily on the value of the real estate that will serve as collateral.
Steps to Secure a Hard Money Loan
The first step in securing a hard money loan involves reaching out to potential money lenders. Be prepared with details about your property and investment plan.
You'll then fill out an application where you detail specifics about the asset - often real estate - you're offering as collateral. Lenders are particularly interested in how you plan to pay back the loan: whether through selling the property, refinancing it, or both.
After submitting this information, an appraisal occurs. This independent evaluation determines if your proposed collateral meets the lender's criteria for approval.
A unique aspect of how hard money loans work, compared to other financing options like conventional loans or construction loans, lies in their speediness and flexibility. Because they aren't tied down by rigid banking regulations and extensive paperwork processes, these loans can be approved within days instead of weeks (or even months).
In addition, unlike traditional mortgage providers who consider borrowers' financial situation extensively before approving any funds — including credit history and tax returns — hard money lenders focus more on assessing each individual deal itself rather than scrutinizing borrower credentials at length. Hard-money lending offers more personalized terms because every project is considered unique; hence no standard cookie-cutter approach works here.
If all goes well during the appraisal and review, the lender will offer terms for your loan. The details of the loan may be very different based on the particular deal and other elements, like regional real estate market trends.
After you accept these terms, funding is provided promptly to meet specific needs or deadlines associated with your investment property purchase. This speed gives borrowers a significant edge in competitive markets where quick action often makes all the difference between securing an opportunity and missing out.
Key Takeaway
Hard money loans offer a fast, flexible alternative to traditional mortgages. They focus more on the property's value as collateral than your credit score or income. After finding potential lenders and detailing your investment plan, you'll apply by explaining how you'll repay the loan - either through selling or refinancing the property. The quick approval and funding process gives investors an upper hand in competitive real estate markets.
Leverage Hard Money Loans
Hard money loans offer an effective solution for real estate investors seeking to finance quick-turnaround projects. One such use is financing fix-and-flip projects.
Financing Fix-and-Flip Projects with Hard Money Loans
A typical scenario where hard money shines involves fix-and-flip projects. These short-term investments need fast, flexible funding—exactly what hard money lenders provide.
In a hot real estate market, speed matters. With traditional mortgages or conventional loans from your local bank, approval and funding can take weeks or even months. But that's time you don't have when a potential investment property catches your eye and there are multiple offers on the table.
This is where hard money lending steps in to save the day. Unlike conventional financing methods which consider borrower's credit history and tax returns extensively, private lenders offering these types of loan programs primarily evaluate the value of the asset—your prospective investment properties—in question. This approach lets them make faster decisions because they're less concerned about your credit score or financial situation at large.
Besides fix-and-flips, another common utilization for this type of short-term loan includes bridge financing scenarios—a gap cover until long-term financing kicks in—or construction loans needed to kickstart building on an undeveloped plot before refinancing with a traditional mortgage post-completion.
- Investment properties acquisition: Given their speedy processing times compared to conventional mortgages, hard money loans can be ideal for purchasing investment properties swiftly.
- Bridge financing: These loans are often used as a stop-gap to meet specific short-term financial needs until permanent, usually cheaper, funding becomes available.
- Construction projects: Real estate developers often turn to these types of loans for initial construction costs before refinancing with traditional options post-project completion.
In summary, the beauty of hard money lies in its versatility and speed—making it an invaluable tool for savvy real estate investors.
Key Takeaway
These loans can help real estate investors snag great deals, bridge financial gaps swiftly, or even get construction projects off the ground pronto. They're all about valuing the property over credit history—making them a powerful tool in your investment arsenal.
Eligibility Criteria for a Hard Money Loan
If you're investigating the property market, it's critical to comprehend that acquiring a hard money loan isn't comparable to getting conventional funding from your nearby bank. So, what does eligibility look like?
Credit Score and Hard Money Loans
The first thing you need to know is credit scores don't carry as much weight in this realm of lending. While conventional loans put heavy emphasis on borrower's credit history and tax returns, hard money lenders focus more on collateral value.
In fact, approval for hard money loans often goes to borrowers with lower credit scores. That doesn’t mean they disregard your financial situation entirely; but rather than dissecting every detail of your past finances, they use investment properties or the potential estate purchase as security against default.
This type of loan typically works best if you want to fix-and-flip houses or fund construction projects quickly because conventional mortgages might not meet specific time-sensitive requirements.
A few things are key when considering whether a hard money loan is right for you:
- You own property that can serve as collateral;
- You’re investing in an opportunity requiring quick funding;
Finding hard money lenders who offer favorable terms should be part of any savvy investor’s strategy—especially given the ever-changing real estate market trends. Your chosen lender will evaluate the property before deciding how much help they can give towards its acquisition or renovation.
Advantages of Opting for Hard Money Loans
Hard money loans are not just a financial solution; they're an opportunity. They offer flexibility, speed of funding, and less emphasis on credit history—making them a viable option for real estate investors or individuals who need quick access to capital.
Speed and Flexibility in Hard Money Lending
A key benefit of hard money loans is their speed. Traditional lenders may take weeks to process your loan application, but hard money lenders can approve your request within days. This speedy turnaround time makes all the difference when you're racing against others to purchase prime real estate.
Besides this lightning-fast approval rate, hard money loans also bring flexibility into play. Unlike conventional mortgages and construction loans, private lenders have the freedom to tailor loan terms according to the borrower's specific requirements. You don’t find such leeway with conventional mortgages or construction loans.
This mix of agility and adaptability opens up avenues that might be closed off with traditional financing methods. For instance, if you’re eyeing an investment property at a foreclosure auction where cash buyers usually dominate - guess what? A hard money loan lets you compete too.
No discussion about advantages would be complete without mentioning credit score considerations—or lack thereof—in case of hard-money lending. Conventional banks obsess over numbers on your FICO report while deciding whether you qualify for a mortgage or not—but private lenders prioritize collateral value over credit scores.
In other words: Yes—you could get a loan even with less-than-perfect credit. This is not to suggest that hard money lenders don’t care about your financial history—they do—but they also consider other factors like the property’s value and your plan for it.
One last point to remember: Hard money loans are short-term—usually lasting only 12-18 months. So, while you won't have as much time to repay them as you would with a traditional mortgage, this shorter timeframe could be an advantage if you're planning on flipping properties quickly or need bridge financing until long-term funding comes through.
Key Takeaway
Hard money loans: An investor's secret weapon. They offer quick funding, flexibility, and less focus on credit history. Ideal for snagging prime real estate or if you're a flipper needing short-term finance.
Your credit score isn't king here; it’s the property value and your plan that matter more to these lenders.
Potential Drawbacks of Hard Money Loans
Just like any financial product, hard money loans come with their own set of risks and downsides. Although they offer quick access to capital, the trade-off can be quite hefty.
Understanding Interest Rates in Hard Money Loans
The most notable drawback is that interest rates on hard money loans are typically higher than traditional mortgages. These lenders charge more because they take a greater risk by lending based on property value rather than credit history or income proof. These loans tend to come with rates that are roughly 10% higher than standard mortgages.
High-interest rates are not the only thing to be aware of when taking out a hard money loan; borrowers should also factor in other costs, such as origination fees or closing expenses, that could significantly raise the total expense.
Another disadvantage is the short lifespan of these loans—usually just 12-18 months—which means you'll need a solid exit strategy when your term ends. Whether that’s selling an investment property at a profit or refinancing into a conventional mortgage depends largely on real estate market trends during your loan period.
This fast repayment timeline could potentially put pressure on investors if they’re unable to sell quickly enough or refinance through traditional lenders due to poor credit score considerations from previous transactions—a significant downside given how unpredictable local real estate markets can sometimes be.
Furthermore, as Loans.com.au points out, many private lenders have less stringent regulations compared to conventional banks; this lack of oversight could potentially lead some unethical providers towards predatory practices.
While these disadvantages might seem daunting initially—and rightly so—it's crucial for potential borrowers considering this type of financing option understand what they're signing up for. Be sure to ask your potential lender plenty of questions about the terms and conditions, read reviews from other borrowers, and perhaps most importantly—compare their offers with those of other hard money lenders.
By understanding these risks associated with hard-money lending before diving in headfirst into this form of investment financing can save you a great deal of time, money—and stress—in the long run.
Key Takeaway
Hard money loans can be a fast way to get capital, but they come with some big trade-offs. They've got higher interest rates and extra expenses like origination fees or closing costs. With their short lifespan of 12-18 months, you're going to need an exit plan when your term is up. But watch out for private lenders who aren't as regulated - some might use predatory practices. So make sure you do your research thoroughly.
Choosing a Reliable Hard Money Lender
Finding the right hard money lender is as vital as picking the perfect property. Remember, terms can significantly vary among lenders. So, how do you go about finding a reliable local hard money lender?
To determine a reliable lender, it's important to understand the qualities that define one. Trustworthy lenders like our Texas' top-rated lenders, offers quick funding and competitive rates with outstanding customer service.
The question then becomes - how to find such reliable local hard money lenders? The key lies in due diligence. Ask for referrals from your real estate network or search online directories dedicated to listing reputable private investors who are known for their fair lending practices.
Tips on Finding Your Ideal Hard Money Loan Lender
Avoid jumping at the first offer that comes your way because it seems easy or fast. Instead, shop around until you get a feel for the market trends and average loan terms being offered in your area.
In addition to comparing interest rates and fees across different lenders (as these tend to be higher than conventional financing), look into their reputations within the industry. Check out reviews left by previous borrowers; this will give an idea about whether they're straightforward during negotiations or if there were unexpected hiccups throughout the process.
Evaluating Potential Lenders
To evaluate potential lenders further more deeply consider checking their level of experience with specific types of properties or projects similar to yours — not all loans are created equal. Some might specialize in residential real estate while others focus on commercial properties which means they'll have unique insights into each sector's respective challenges and opportunities.
Why a Local Hard Money Lender?
Local hard money lenders have an intimate understanding of the real estate market trends in their area. They're familiar with local regulations and industry practices, making them more equipped to offer advice tailored specifically for your project.
Moreover, it's a real plus to find local hard money lenders. They can be a big help when you're ready to invest in property.
Key Takeaway
Finding the right hard money lender is as crucial as choosing your property. Don't rush to accept the first offer, but instead, shop around and compare rates, fees, and reputations. Look for lenders with experience in similar projects to yours. Local lenders are a plus due to their deep understanding of area-specific market trends.
Hard Money Loan FAQs
Are hard money loans a good idea?
Hard money loans can be a smart move if you're an investor needing quick, short-term funding for real estate projects. But weigh the higher interest rates and fees.
Why would someone do a hard money loan?
Borrowers might opt for hard money loans when traditional lenders reject them, or they need fast cash to seize investment opportunities.
What is a hard money loan example?
An investor could use a hard-money loan to buy, refurbish, then quickly sell (flip) property at profit despite high-interest costs due to the short term of the loan.
What credit score is needed for a hard money loan?
Credit scores are less crucial in securing these asset-backed loans. Lenders focus more on your collateral's value rather than your creditworthiness.
Conclusion
They offer flexibility, speed, and an opportunity for those with less than perfect credit history.
The unique mechanism behind hard money lending lets you finance fix-and-flip projects, construction jobs, or secure investment properties quickly.
Yes, they may come with higher interest rates and shorter terms but finding a reliable local lender could help negotiate these factors to fit your financial situation better.
